Reference no: EM132491116

a. Quick Computing currently sells 7 million computer chips each year at a price of $12 per chip. It is about to introduce a new chip, and it forecasts annual sales of 22 million of these improved chips at a price of $15 each. However, demand for the old chip will decrease, and sales of the old chip are expected to fall to 1 million per year. The old chips cost $6 each to manufacture, and the new ones will cost $10 each. What is the proper cash flow to use to evaluate the present value of the introduction of the new chip? (Enter your answer in millions.)

b. Tubby Toys estimates that its new line of rubber ducks will generate sales of $6.60 million, operating costs of $3.60 million, and a depreciation expense of $0.60 million. If the tax rate is 30%, what is the firm's operating cash flow? (Do not round your intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)